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Why We Love Canadian Stocks

For Motley Fool CAPS investors, it's a matter of glitter and ooze.

I was looking over the top-rated stocks on Motley Fool CAPS recently and I couldn't help but notice a trend: Investors love Canadian stocks!

It is hockey season, after allOur neighbors up north deserve the recognition. Over the past five years, the iShares MSCI Canada Index has posted 28% annualized returns, much better than the S&P 500.

Increased global demand for commodities such as silver, oil, and copper, has helped boost the Canadian markets, and tremendous five-year returns from companies including Research In Motion (Nasdaq: RIMM) and Potash Corp. of Saskatchewan (NYSE: POT) didn't hurt, either.

Is it too late to get in on the Canadian action? CAPS investors sure don't think so. Four of the top 100 stocks on CAPS are headquartered in Canada. They are:

Company

Industry

Silver Standard Resources (Nasdaq: SSRI)

Silver

Compton Petroleum (NYSE: CMZ)

Oil and gas

Canadian Natural Resources (NYSE: CNQ)

Oil and gas

Gildan Activewear (NYSE: GIL)

Apparel clothing

Source: Motley Fool CAPS, as of Feb. 29, 2008.

Follow the admiralOf the four, Canadian Natural Resources has garnered the most attention on CAPS, with 739 of the 752 investors who registered an opinion believing the stock will outperform the S&P 500 going forward.

The CNQ fire was recently fanned by Motley Fool Inside Value advisor Philip Durell when he nominated the stock in our "Best International Stock for 2008" survey. In his opinion, the company has "an outstanding track record of shareholder value creation" and should continue to reward shareholders going forward. Moreover, its Horizon oil sands project in Alberta "will produce enough reserves to last for roughly four decades," and with no end to high oil prices in sight, the company should stand to profit mightily.

Production from oil sands is growing and reserves will last for tens of years. What's more, the reserves are located in stable country and the F&D costs are constant. Compare that to conventional oil production companies which drill high risk, high decline rate prospects in deep waters of politically unstable Western Africa.

No silver medal hereSilver Standard Resources is currently the top-rated stock in CAPS, with 328 of 337 investors believing it will beat the S&P 500. The company has silver mineral properties across the Americas and has minor interests in gold and copper as well.

According to the company's own description, its fate is tied almost completely to the silver stuff: "Leveraged to silver, the company's common shares behave like an open-ended call option on silver, enhanced by focused exploration, low-cost acquisitions, and compelling fundamentals for silver." Indeed, SSRI shares show a strong positive correlation to the price of silver, as gauged by the iShares Silver Trust (NYSE: SLV).

CAPS investors wouldn't want it any other way. Last April, islndguy noted the company's knack for finding silver, referring to its Pitarrilla mines:

Recent "bonanza find" in Mexico looks promising. They have many properties in advanced stage of development [which] should be attractive to major producers. They seem good at controlling costs and building up reserves.

Not just a great national anthemWhether it's a bet on the Alberta oil sands, natural resources like timber and silver, or the banks that stand to profit from the commodity boom, Canada has some great stocks that are definitely worth researching.

What do you think about these Canadian stocks, or any stock for that matter? More than 85,000 investors are waiting to hear what you have to say. To make your voice heard, simply sign up for Motley Fool CAPS. It's completely free.

Fool contributor Todd Wenning thanks Canada for NHL commentator Barry Melrose's sense of style and command of the mullet. Todd does not own shares of any company mentioned. The Fool's disclosure policy is world-class.